Dividend Announcements And The Valuation Effects Of Corporate Divestiture
- Topics:
- Valuation
- Tags:
- Business Operations,
- Corporate Law,
- Divestiture,
- Dividend,
- Finance,
- Financial Accounting,
- Financial Planning,
- Valuation
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Overview: This article examines the returns to 175 divestitures and 21 acquisitions associated with divestiture occurring between 1990 and 1994. Consistent with previous research, it find positive abnormal returns associated with divestiture on and before the announcement date. However, abnormal returns disappear, save for day -1, upon application of a contemporaneous dividend announcement filter. Acquiring firms experience significant positive abnormal returns on average the day prior to announcement. Moreover, acquiring firm wealth effects weaken considerably upon application of a contemporaneous dividend filter. The research suggested that wealth effects associated with divestitures are sensitive to contemporaneous dividend announcement effects, and studies that fail to employ careful data filtering techniques may produce biased results.
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Format: PDF | Size: 75KB | Date: Jul 2000 | Pages: 13
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